1st Time Home Buyer-FHA Loan Questions

[jamesrini79]

My credit score is 686  and I want to purchase my first home. I make $80,000 yearr & my monthly debts are under $500/mnth.  I was referred to a family friend thats a mortgage broker( as I hear you can get screwed by these people-so choose wisely) I receieved a preapproval letter for $420k at 4.5%. My question is how do I know i got the best deal on the mortgage-? I googled FHA mortgage rates and I see banks offering 3.8%. What do i look for -PMI? This is all new to me and Im self educating as much as possible along the way. Is Wells Fargo FHA mortgages good? I found the house and put a bid so I want to get all my mortgage q out of the way. Thanks

[Anonymous]

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@jamesrini79 wrote:

My credit score is 686  and I want to purchase my first home. I make $80,000 yearr & my monthly debts are under $500/mnth.  I was referred to a family friend thats a mortgage broker( as I hear you can get screwed by these people-so choose wisely) I receieved a preapproval letter for $420k at 4.5%. My question is how do I know i got the best deal on the mortgage-? I googled FHA mortgage rates and I see banks offering 3.8%. What do i look for -PMI? This is all new to me and Im self educating as much as possible along the way. Is Wells Fargo FHA mortgages good? I found the house and put a bid so I want to get all my mortgage q out of the way. Thanks

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I am working with WF right now on a 203k FHA loan and I think they're OK.  So far things have been relatively smooth - no major bumps besides some dispute comments on my CRA that needed to be deleted early in the preapproval process.

Anyway, I did speak to a friend of mine who's a broker and she quoted very similar rates for FHA as WF...but most brokers don't do 203k deals.  That is why I chose WF.  I know for FHA, they're at 4.25 and for FHA 203k it's 4.5.  Not too bad, I don't think.  I suppose you can shop around but it's probably not a good idea to let everyone and their brother pull your credit, that's a lot of inquiries.

As far as mortgage insurance, FHA has standard rates for the monthly mortgage insurance.  I believe it's around .95% but not entirely sure on that (it's based on your LTV and loan term).  There's also an up front mortgage insurance premium (UFMIP) that you neeed to pay, 1% of the loan amount .  This can be rolled into the loan though so it's not something you have to pay at closing if you don't want to. 

[BrianB_The_Loan_Professor]

If you loan amount is 420k you should consider getting it down to 417k

That is where the adjustment is for jumbo loans and your rate may be a little high for a loan that size but if it is priced as a Jumbo you are probably right in the ball park provided they arent charging any points

if you are being charged any points I would shop around

also ask about the difference if you get the low down to 417k and see what they say

There are so many variables that go into the rate it is very difficult to compare to anything other than your own scenario as most loans are not alike

Good luck

Brian

[Anonymous]

Keep in mind 2 things...

One, check around with different lenders and see what they are offering.

Two, you will not get the best rate, and the best closing costs at the same place.  SO you have to decide which is more important....Lower rate on the loan, or lower costs out of pocket upfront.  Do the math between the options and see what makes sense.

Lastly, be aware that there are teaser rates out there all over the place.  That does not mean you will ever ge them without paying points, putting large DP, or something.  Just use some common sense, and remember that any rate you get today is almost half of the historical rate on a mortgage loan, so try to also take into consideration the quality of the broer you talk to (do not jump at a low rate if the broker does not seem to respond quickly and freely or is "selling" you too hard).  There are plenty of honest and hardworking brokers out there that can get you geat rates that it is not worth dealing with the ones that are not going to take care of you for a few dollars per month....